IndiGo share tanks 13% on ₹987 cr Q2 loss

Airline major InterGlobe Aviation Ltd, the parent company of India's largest airline IndiGo, saw its share hitting 13.4% lower following its ₹987 crore loss for the second quarter that ended September 2024. The IndiGo share opened lower at ₹4,108.80 compared to the previous session close of ₹4,364.64 today and soon hit the day's low of ₹3,778.50 on the BSE, down 13% from the last day.

At the current share price of ₹4,056.45, down 7.10% (1.24 PM), IndiGo's market cap remains at ₹1.56 lakh crore. The share trades 19% lower than its one-year high of ₹5,033.20 on September 12, 2024, while it is 40% up from its one-year low of ₹2,415 on November 1, 2023.

The scrip has risen 62.45% in the past year, while its calendar-year gain is 36.02%. In the past six months, the share saw just 3.22% rise, while it fell 15.39% in the past month alone.

IndiGo's Q2FY25 loss stood at ₹986 crore, primarily due to higher fuel costs and the grounding of several planes due to engine issues. The airline's revenue jumped 13.5% to ₹16,969 crore in the second quarter compared with ₹14,943 crore in the year-ago period.

According to IndiGo CEO Pieter Elbers, in a traditionally weaker second quarter, the results were further impacted by headwinds related to groundings and fuel costs. “We have turned the corner as the number of grounded aircraft and associated costs have started reducing,” said Elbers. The airline flew 27.8 million passengers in Q2, up 5.8% year-on-year. “We continue to capitalise on the growth of the Indian market and associated opportunities and at the same time remain a cost leader in this competitive market,” he said.

The airline's total expenses were ₹18,666 crore, an increase of 21.9% over the same quarter last year. Yield, the average amount of revenue received per paying passenger flown one kilometre, rose 2.3% YoY to ₹4.55 in Q2 FY25 from ₹4.44 in the corresponding quarter last year.

The carrier’s available seat kilometres (ASK), a measure of an aeroplane's carrying capacity to generate revenue, rose 8.2% year-on-year to ₹3,820 crore in Q2. As of September 2024, IndiGo had a total cash balance of ₹39,341 crore comprising ₹24,359 crore of free cash. The carrier has a fleet of 410 aircraft.

For the third quarter of FY25, IndiGo says capacity in terms of ASKs is expected to increase by early double digits as compared to the third quarter of fiscal year 2024.

Kotak Securities maintained a 'BUY' recommendation on the stock but lowered its target price from ₹5,400 to ₹5,200. The brokerage anticipates that strong demand trends and a focus on expansion will support the airline’s path to profitability. Conversely, Nuvama downgraded the stock, setting a target price of ₹4,415, citing a challenging near-term outlook as growth in capacity is outpacing the rise in demand.